₹26,000 Crore in Claims Rejected: Why DIY Insurance Can Fail When You Need It Most

You bought insurance online—quick, convenient, and cheaper without agent commissions. Fast forward to when you file a claim, and it gets rejected. You're left confused, angry, and financially vulnerable. This nightmare is becoming increasingly common for DIY insurance buyers.

The Shocking Numbers

According to the Insurance Regulatory and Development Authority of India annual report for fiscal year 2024, insurance companies rejected and repudiated health insurance claims worth rupees twenty-six thousand crore—a staggering nineteen point one percent increase from the previous year.

The Five Deadly Mistakes DIY Insurance Buyers Make

1. Not Reading the Policy Document

Most people buy insurance online by clicking through screens quickly, never reading the actual policy document delivered via email. They see "covers pre-existing diseases" but miss the asterisk that says "after four years of continuous coverage."

Real example: A policyholder filed a claim for diabetes treatment after two years. Claim rejected because pre-existing conditions required four years of continuous coverage. The buyer never read beyond the marketing brochure.

2. Incomplete or Incorrect Disclosure

When buying online, people rush through health declaration forms, either forgetting past medical conditions or thinking "it won't matter" for minor issues. Insurance companies conduct thorough investigations before approving claims, and any discrepancy leads to rejection.

3. Insufficient Coverage Amount

To save on premiums, many buy policies with rupees three to five lakh sum insured. When hospitalized in a metro city, bills easily exceed this amount. They're left paying out-of-pocket because they underestimated healthcare costs.

Industry recommendation: Minimum ten to fifteen lakh coverage for individuals, twenty to twenty-five lakh for families in metro cities.

4. Choosing Wrong Network Hospitals

Cashless hospitalization only works at network hospitals. DIY buyers often don't verify if their preferred hospitals are in the network. They discover this at admission time and end up paying out-of-pocket, then filing reimbursement claims that face additional scrutiny.

5. Missing Critical Riders and Add-Ons

Base policies have numerous exclusions. Without understanding which riders to add—like critical illness cover, maternity benefits, or room rent waivers—buyers end up with inadequate protection for their actual needs.

Why Claims Get Rejected: The Technical Reasons

What Insurance Advisors Do That Online Portals Don't

Professional insurance advisors add value at every stage of the insurance lifecycle. Their role goes far beyond just "selling" a policy.

At Purchase Stage:

• Needs Analysis: Assess your actual insurance requirement based on family health history, age, lifestyle, and financial situation
• Policy Comparison: Compare multiple insurers objectively based on claim settlement ratio, network hospitals, and exclusions—not just premium
• Disclosure Guidance: Help you complete proposal forms accurately and completely, preventing future claim rejections
• Rider Selection: Recommend appropriate add-ons based on your specific needs

During Policy Term:

• Premium Reminders: Ensure timely payment to prevent policy lapse
• Policy Reviews: Annual review to check if coverage remains adequate as your life situation changes
• Portability Assistance: Help switch insurers if better options emerge
• Clarifications: Answer questions about coverage, waiting periods, and claims process

At Claim Stage:

• Documentation Support: Help gather all required documents correctly
• Claim Filing: Assist with filing process and follow up with insurer
• Dispute Resolution: Represent you in case of claim rejection, helping with appeals
• Hospital Coordination: Facilitate cashless approval and hospital billing

The True Cost of "Free" DIY Insurance

New IRDAI Regulations: A Silver Lining

In 2024, IRDAI introduced new regulations stating insurers cannot reject claims solely for documentation issues. While this is a positive step, it doesn't address the more common reasons for rejection like non-disclosure, policy lapses, or coverage limitations.

Professional advisors help you avoid these pitfalls from the beginning, making claim rejection unlikely when it matters most.

Questions to Ask Before Buying Insurance Online

If you can't confidently answer all these questions, you need professional advice—not a DIY approach.

Final Thought

Insurance isn't a commodity you buy and forget. It's a promise that when life throws a curveball—a medical emergency, an accident, or an unexpected death—your family will be protected financially.

Saving a few thousand rupees in commissions seems smart until you're stuck with a rejected claim worth lakhs. Professional insurance advisors don't just sell policies—they ensure those policies actually work when you need them most.

Your family's financial security is too important to leave to trial and error. Get it right the first time with professional guidance.